Several prominent crypto exchanges, including OKX, Bybit, and KuCoin, have announced their plans to publish Proof-of-Reserves to provide full transparency to their customers.
A Merkle Tree, also known as a binary hash tree, is a type of data structure that is used for preventing the manipulation of blockchain data.
Proof-of-Reserves require third-party auditors to store the hash values of users’ account balances within Merkle Trees. The auditors then verify the amount of users’ assets with their account balances on the exchange.
On November 8, Changpeng Zhao, the CEO of Binance, announced his plans to complete Proof-of-Reserve audits. He also suggested that other crypto exchanges should complete Merkle Tree Proof-Of-Reserves.
OKX agreed with Changpeng Zhao’s proposal and added that the exchange has hired Armanino to oversee its Merkle Tree audits.
Similarly, Johnny Lyu, KuCoin's CEO, declared the platform will release Proof-of-Reserves in a month.
Besides them, six other exchanges: KuCoin, Poloniex, Bybit, Deribit, Houbi, and Gate.io also claimed to publish Proof-of-Reserves.
Following FTX’s liquidity crunch, many crypto analysts have voiced their support for implementing Proof-of-Reserves, with Jack Yang, Founder of LPT, noting
"The incident of the FTX thunderstorm will definitely promote the development of crypto in a more transparent and compliant direction."
